Singapore industrial leasing volume down 6.3% to 3,209 tenancies in Q3

Single-user factory leases are down 21.2%.

A recent Savills report revealed that Singapore industrial leasing volume continued to fall in Q3, albeit at a moderated pace at 6.3% YoY, bringing the total number of transactions to 3,209 tenancies. The decline was attributed to fewer tenancies signed across all property types. 

“Leasing demand for factory spaces continued to weaken in Q3 with leasing transactions for single- and multiple-user factory segments falling by 21.2% and 5.7% YoY respectively. While leasing demand for warehouse logistics space remained strong in prime areas, those for warehouses saw a marginal decline of 0.6% YoY,” the report added.

Here’s more from Savills:

The vacancy level for single-user factories rose by 0.5 of a percentage point (ppt) QoQ to 10.2% in Q3. This is likely to be due to an injection of new supply (580,000 sq ft) and some relocation among industrialists, particularly the West and North Planning Areas.

Despite some major completions including JTC Defu Industrial City, the vacancy level for multiple-user factory inched up by just 0.2 of a ppt QoQ to 10.8% as demand for logistics space was still strong. Compared to the 9.1% vacancy level recorded in Q2, that measure stayed relatively stable at 9.2% as the take-up in Central and North Planning Regions were healthy. 

The overall industrial rents continued to increase for eight consecutive quarters in Q3, with JTC’s rental index for factory spaces rising at its fastest pace since 2016. For warehouse rents, the JTC’s index rose again to its highest level in the last six years. 

Savills’ average monthly rents also continued to increase in Q3, with rents for prime multiple-user factories rising by 0.4% QoQ to S$2.01 per sq ft. With the support from healthy leasing momentum and a shortage of quality facilities, Savills’ average monthly rents for warehouse and logistics properties doubled the pace of increase to 2.8% QoQ and rose to S$1.51 per sq ft in Q3.